HOUSE BILL No. 6174

 

May 22, 2008, Introduced by Rep. Farrah and referred to the Committee on Regulatory Reform.

 

     A bill to amend 1998 PA 57, entitled

 

"An act to require contractors to provide certain notices to

governmental entities concerning improvements on real property; to

allow for the modification of contracts for improvement to real

property; to provide for remedies; and to repeal acts and parts of

acts,"

 

by amending sections 1, 2, 3, 4, and 5 (MCL 125.1591, 125.1592,

 

125.1593, 125.1594, and 125.1595).

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 1. As used in this act:

 

     (a) "Construction manager" means an individual, sole

 

proprietorship, partnership, corporation, limited liability

 

company, joint venture, or other legal entity, that, pursuant to an

 

engagement by a governmental entity and acting primarily in an

 


administrative or managerial capacity, procures and enters into 1

 

or more contracts for the construction, alteration, demolition, or

 

repair of an improvement.

 

     (b) (a) "Contractor" means a person who contracts with a

 

governmental entity or construction manager to improve real

 

property. or perform or manage construction services. Contractor

 

does not include a person licensed as an architect, professional

 

engineer, or professional surveyor under article 20 of the

 

occupational code, 1980 PA 299, MCL 339.2001 to 339.2014.

 

     (c) (b) "Governmental entity" means the state, a county, city,

 

township, village, public educational institution, or any political

 

subdivision thereof.

 

     (d) (c) "Improve" means to build, alter, repair, or demolish

 

an improvement upon, connected with, or beneath the surface of any

 

real property, to excavate, clear, grade, fill, or landscape any

 

real property, to construct driveways and roadways, or to perform

 

labor upon improvements.

 

     (e) (d) "Improvement" includes, but is not limited to, all or

 

any part of any building, structure, erection, alteration,

 

demolition, excavation, clearing, grading, filling, landscaping,

 

trees, shrubbery, driveways, and roadways on real property, that is

 

paid by public funds or by special assessment.

 

     (f) (e) "Person" means an individual, corporation,

 

partnership, association, limited liability company, governmental

 

entity, or any other legal entity.

 

     (g) (f) "Real property" means the real estate that is

 

improved, including, but not limited to, lands, leaseholds,

 


tenements, hereditaments, and improvements placed on the real

 

property.

 

     Sec. 2. A contract between a contractor and a governmental

 

entity or a construction manager acting for or on behalf of a

 

governmental entity for an improvement that exceeds $75,000.00

 

shall contain all of the following provisions:

 

     (a) That if a contractor discovers 1 or both of the following

 

physical conditions of the surface or subsurface at the improvement

 

site, before disturbing the physical condition, the contractor

 

shall promptly notify the governmental entity or construction

 

manager of the physical condition in writing:

 

     (i) A subsurface or a latent physical condition at the site is

 

differing materially from those indicated in the improvement

 

contract.

 

     (ii) An unknown physical condition at the site is of an unusual

 

nature differing materially from those ordinarily encountered and

 

generally recognized as inhering in work of the character provided

 

for in the improvement contract.

 

     (b) That if the governmental entity or construction manager

 

receives a notice under subdivision (a), the governmental entity

 

shall promptly investigate the physical condition.

 

     (c) That if the governmental entity determines that the

 

physical conditions do materially differ and will cause an increase

 

or decrease in costs or additional time needed to perform the

 

contract, the governmental entity's determination shall be made in

 

writing and an equitable adjustment shall be made to the

 

contractor's price and time for the improvement and the its

 


contract modified in writing accordingly.

 

     (d) That the contractor cannot make a claim for additional

 

costs or time because of a physical condition unless the contractor

 

has complied with the notice requirements of subdivision (a). The

 

governmental entity or construction manager may extend the time

 

required for notice under subdivision (a).

 

     (e) That the improvement contract shall be considered to

 

include information representing, depicting, describing, or

 

concerning physical conditions present on, in, or under the site of

 

the proposed improvement, or information from which such conditions

 

can be reasonably derived, which the governmental entity,

 

construction manager, or its representative provided or offered for

 

inspection to the bidders prior to the submission of bids,

 

notwithstanding any disclaimer or disavowal of such information

 

elsewhere in the improvement contract.

 

     (f) (e) That the contractor cannot make a claim for an

 

adjustment under the contract after the contractor has received the

 

final payment under the contract.

 

     Sec. 3. (1) If the contractor does not agree with the

 

governmental entity's determination, with the governmental entity's

 

consent the contractor may complete performance on the contract.

 

     (2) At In lieu of litigation in a court of competent

 

jurisdiction and at the option of the governmental entity, the

 

construction manager, or the contractor, the contractor and the

 

governmental entity or construction manager shall arbitrate the

 

contractor's entitlement to recover the actual increase in contract

 

time and costs incurred because of the physical condition of the

 


improvement site. The arbitration shall be conducted in accordance

 

with the rules of the American arbitration association

 

association's construction industry arbitration rules and mediation

 

procedures, and judgment the decision rendered may be entered in

 

any court having jurisdiction over the matter.

 

     Sec. 4. (1) If an improvement contract does not contain the

 

provisions required under section 2, the provisions shall be

 

incorporated into and considered part of the improvement contract.

 

     (2) Any provision contained in the improvement contract that

 

purports to waive, release, or extinguish the rights of a

 

contractor to recover costs or damages for unreasonable delay in

 

performing the improvement contract, either on his or her behalf or

 

on behalf of his or her subcontractor, if and to the extent the

 

delay is caused by the acts or omissions of the governmental entity

 

or construction manager, its agents, or employees and due to causes

 

within their control, shall be void and unenforceable as against

 

public policy.

 

     Sec. 5. This act does not limit the rights or remedies

 

otherwise available to a contractor or the governmental entity or

 

construction manager under any other law or statute.

 

     Enacting section 1. (1) This amendatory act takes effect

 

January 1, 2009.

 

     (2) This amendatory act applies to any contracts entered into

 

on or after January 1, 2009.

 

     Enacting section 2. This amendatory act does not take effect

 

unless all of the following bills of the 94th Legislature are

 

enacted into law:

 


     (a) Senate Bill No.____ or House Bill No. 6176(request no.

 

04828'07).

 

     (b) Senate Bill No.____ or House Bill No. 6175(request no.

 

04829'07).

 

     (c) Senate Bill No.____ or House Bill No. 6173(request no.

 

04831'07).